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Explain the conditions under which the forward exchange rate will be an unbiased predictor of the future spot exchange rate.
Answer: the conditions when forward exchange rate will be an unbiased predictor of the future spot rate is
a) If the risk premium is insignificant and
b) If foreign exchange markets are informationally efficient.
(a) iTraxx is a group of credit derivative index managed by the International Index Company (IIC) and covering Europe and Asia and Australia. The body in the portfolio forming th
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